A new dispute over proxies and voting rights of stock threatens to disrupt - and possibly postpone - next Wednesday's annual shareholder meeting of Financial General Bank-shares Inc.
The Washington bank holding company, already the target of a takeover bid by Bert Lance and a group of Arab investors, now is torn by an internal dispute over who can vote certain shares.
Financial General President G. William Middendorf contends in the announcement of the annual meeting that he holds "irrevocable" proxies allowing him to vote more than 25 percent of the company's stock.
But some of the stockholders who gave their proxies to Middendorf have since sold their shares to the Arabs, whose attorneys contend that Middendorf's proxies no longer are valid.
And Financial General's largest single shareholder, Eugene B. Casey, who had given Middendorf proxies to vote his 9.2 percent of the company's stock, now says Middendorf is misusing his power over the shares.
Casey said yesterday he has notified Middendorf and the Securities and Exchange Commission that he intends to reclaim the voting rights of his shares.
Long critical of Middendorf and Financial General Chairman B. Francis Saul, Casey had warned earlier that he might abstain from voting his stock.
That action, along with the dispute over other shares, could make it impossible for the company to hold the annual meeting, because there would be no quorum (more than 50 percent of the shares) present and voting.
The possibility that Financial General might not be able to muster a quorum was raised yesterday by Casey and Eugene Metzger, the Washington attorney involved with Lance and the Arab investors who have bought more than 20 percent of Financial General's shares.
Blocking the quorum, Metzger admitted, would leave Financial General's present board of directors in power, but he added, "it would have tremendous psychological implications."
The board members "would understand the caretaker nature of their actions," said Metzger.
The Metzger and Lance group agreed several weeks ago, as part of a settlement of a complaint by the SEC, to make a tender offer for all the stock of Financial General, an offer that if successful could give them control of the company.
Metzger pointed out - and Financial General's proxy statement confirms - that the company has hired a firm specializing in proxy solicitation to help garner voting shares for the meeting, to be held at 10 a.m. Wednesday at the Hyatt Regency Hotel in Richmond.
About 30 percent of the Financial General's shareholders usually do not show up for the annual meeting or assign anyone the proxy to vote their shares.
Those no-shows plus the disputed proxies on the Casey shares and the stock held by the Arabs' Metzger and Lance could add up to more than half the voting stock.
Middendorf could not be reached yesterday for comment on the dispute over voting rights of the shares.
Financial General attorney Martin Thaler, who emphasized he was speaking for the corporation and not for Middendorf, said Middendorf obtained proxies to vote large blocks of the company's stock when he lead a group that obtained control of the company a year ago.
Middendorf has notified the company the proxies are irrevocable and he intends to vote the shares, even though much of the stock has been sold by the persons who granted the proxies, Thaler said.
Attorney Robert Altman, who represents Lance and the Arab buyers, said it owuld be "a very unusual situation" for the voting rights of the shock to remain after the shares have been sold. He said no decision has been made on what action to take to block Middendorf's attempt to vote the stock.